Is iPhone upgrade really necessary?

Upgrades that come too fast with too few new features are pushing consumers away from the every-18-months upgrade treadmill.

There has been a lot of noise recently about consumers buying older iPhones instead of the latest iPhone 5. It seems like the question that people are asking themselves en masse when standing at an Apple Store (or even before that) is "Why upgrade when I can have almost the latest iPhone for less?"

Some analysts are worried and disappointed about the not-so-high iPhone 5 sales. Shares of Wall Street's favorite company start to shake when these worries transform into figures.

The Los Angeles Times reported that Apple's profit margins have suffered because so many consumers have been opting for older iPhone models. Nevertheless, Foxconn is pushing its employees to work harder to meet demand for the iPhone 5. These two pieces of news seem to contradict themselves, don't they?

"analysts are worried and disappointed about the not-so-high iPhone 5"
On the other hand some analysts are trashing apple for not having a low cost iPhone...
if not for the older iphone, some of these users might have switched to android/win phone.

There are numerous reasons an owner of an older iPhone should be interested in upgrading to an iPhone 5 -- not the least of which is to get LTE internet speeds instead of 3G.
For customers with carrier subsidized phones, like most U.S. customers, the biggest obstacle is the "new every two" upgrade cycle. When a new iPhone comes out every 18 months but your contract only renews every two years, you end up skipping a generation -- or paying a penalty for upgrading early if you just can't wait. But for many, the justification would need to be a really compelling new feature.
The most compelling new feature that Apple, Samsung or any other smartphone vendor could offer would be a dramatic increase in battery life -- either with new battery technology that offers higher energy density or with a substantial reduction in SoC and display power consumption.
If Apple were to release a new iPhone model that lasted twice as long between charges as the 4s or 5, I think we would again see them break all previous sales records.

You do realize that Wall Street analysts are nothing more than highly-paid morons, right?
These are the same people who look at a company's guidance, and say, "Oh, they always beat their guidance, so we'll set our expectations much higher!"
And then one quarter the company (which ALWAYS beats its own guidance) somehow cannot meet the inflated analyst expectations and then the "investors" flee the stock.
Even when the company is making money hand over fist.
Yes, Wall Street analysts are idiots.